While hospital financial assistance programs help protect low-income patients from overwhelming medical costs, a loophole in the system has left many with unexpected bills, even when they qualify for “full” coverage of hospital charges, CBS News reported Sept. 22.
Nonprofit hospitals are required to provide free or discounted care to patients who are eligible to ensure their tax-exempt status. While for-profit hospitals are not required to offer financial assistance to patients in need, they often do.
The policies don’t always apply to hospital providers that treat patients if they work as independent contractors versus employees. In fact, a June 2025 Lown Institute analysis found that provider services like anesthesia, emergency, pathology and radiology specialties can easily be omitted from hospital charity care.
Caitlin Donovan, a senior director at the Patient Advocate Foundation, told CBS News that this issue is a “hold in the system,” and many case managers that work with patients see these issues frequently.
This challenge could grow over the next few years, as more people lose healthcare coverage due to federal policy changes. An Aug. 20 KFF report found that more than 14 million people are estimated to become uninsured, many of which may rely on discounted care and discover that specific provider services aren’t included.
Concerns have also been raised about another potential barrier that prevents patients from accessing hospital financial assistance. While IRS rules require nonprofit hospitals to cover medically necessary and emergency services under charity care policies, many hospitals retain a broad discretion to define what “medically necessary” care really means. Care that could fall in this area includes a cancer biopsy, a cardiac valve replacement or a kidney stone removal, according to a 2025 study in The New England Journal of Medicine.
Certain states have started to close these gaps. Colorado’s Hospital Discounted Care law, which went into effect in September 2022, requires covered hospitals and licensed providers that practice within them to provide reduced rates to patients who qualify.
However, many states still lack similar protections.
Ge Bai, PhD, a professor of accounting and health policy and management at Johns Hopkins University, told CBS News that while hospitals say “we are going to do all we can to protect our spending … in that environment, charity care will be a burden.”
The American Hospital Association declined CBS News for comment, but its spokesperson Robert Mills said the AMA does not have a position on whether hospitals should require all contracted physicians to participate in their financial assistance policies.
